Disasters mean more insurance awareness

Arnop believes domestic political unrest, the economic slowdown, inflation and high oil prices have all conspired to rob the company of double-digit growth and disrupted smooth operations. But the recent earthquakes and hurricanes have stimulated much fear and an awareness of the benefits of being insured.

With Bt30 million to spend on marketing this year, a record for such a "thrifty spender", in Arnop's words, the company plans to expand its product-liability business.

The Product Liability Act, which takes effect next February 20, will significantly enlarge the market, said Arnop. The company also plans to become a market leader in employee-benefit insurance.

Non-motor insurance will become less important as the company tries at least to break even on its faltering motor-insurance business, which had a loss ratio of about 70 per cent last year. That business, which makes up almost half of the company's premiums, lost Bt50 million last year and Bt100 million in 2006, due largely to liberal claims from city cars and pickups.

Despite raising premiums 10-15 per cent, it will be impossible for the motor business to turn a profit, said Arnop. Gross premiums last year were Bt2.36 billion, falling slightly from Bt2.39 million in 2006. Although a far cry from Bt142 million in 2005, underwriting profit rose by Bt12 million to Bt57 million last year, and net income after tax was Bt137 million.

Arnop said this predicament prevented MSIG Insurance (Thailand) from achieving target growth in gross premiums of 15 per cent set by its parent company in Tokyo. It has instead settled for a more realistic growth figure of 8 per cent to Bt2.5 billion.

The pressure has been on since Aviva sold its Asian business to MSIG Asia. MSIG wants to be No 1 in Asia, said Arnop. Already MSIG Insurance has started to work more closely with another MSIG company in Thailand - Mitsui Sumitomo Insurance Thailand - on the motor-insurance side, sharing a 24-hour claim service, although claim-processing operations are run separately. Each business has its own speciality: MSIG Insurance has a thriving agency channel, while Mitsui Sumitomo has a cosy relationship with Japanese businesses. The MSIG insurers here have a distinct advantage in tapping a large Japanese business base in Thailand. Arnop counts on more corporate tie-ins with, for instance, Toyota dealers in the near future.